LOCAL NEWS

Humboldt County’s Board of Supervisors is aiming to place a commercial marijuana cultivation tax measure on the November election ballot — a move that has some growers concerned about the cost of doing business legally.

The costs, effects and benefits of asking voters to approve a local marijuana cultivation excise tax were analyzed at the June 21 supervisors meeting. Ultimately, supervisors agreed that a tax should be pursued at rates below those recommended by county staff.

Advancement of a tax measure follows telephone polling of 400 residents by a Los Angeles-based firm. According to a written staff report, the poll results show that “the measure is potentially viable as it tested well over the required 50 percent support threshold needed to pass.”

Draft ballot measure language asks, “Shall Humboldt County establish a graduated, annual commercial marijuana cultivation tax of $1 to $12 per square foot, based upon grow type and size, generating approximately $14.1 million annually until ended by voters, all revenue for the county, none for the state, with annual audits and public review?”

Supervisors supported basing the tax rate on grow types and sizes. They also support taxing grows at the lower end of the scale cited in the draft language.

Supervisor Estelle Fennell noted that the county’s tax would be collected in addition to state-level taxes and fees. “We have to be conscious of that and not over-do it here,” she said, adding that the county has been in contact with state legislators “to let them know that it’s important to us and any other area dealing with this kind of excise tax that they not make it more difficult for us by doubling down.”

County Administrative Services Analyst Sean Quincy said that the combined rates of state and local taxes shouldn’t exceed a 35 to 37 percent threshold, which he described as “the danger zone” that discourages legal compliance.

Supervisors generally supported a staff-recommended proposal to progressively tax outdoor, mixed light and indoor grows, with the tiered approach based on each category’s number of harvest cycles.

The sizes of the grows would drive per-foot tax rates. The staff-recommended tiered system advanced a starting rate of $1 per square foot for a 2,500-square-foot outdoor grow, $1.50 per square foot for a mixed-light grow of up to 2,500 square feet and $2 per square foot for an indoor grow up to 1,000 square feet.

The staff-recommended rate schedule tops out at $6 per square foot for a 10,000-square-foot indoor grow.

Supervisors directed staff to return with a draft ballot measure ordinance that reduces the rates by 25 percent across the board.

Staff was also directed to change the list of essential services a tax could fund after Connie Stewart of the California Center for Rural Policy said that local health care providers want the mental health services provision to apply to both children and adults, and to add substance abuse services.

Also during public comment, Stephen Dillon of the Humboldt Sun Growers Guild said state water permit and other fees are already impacting growers. “Margins for a legal farmer right now are coming in really slim,” he said. He told supervisors his group expected that dispensaries would pay more for legally-grown product.

“That’s not the case, they can avail themselves of the world’s largest black market,” Dillon continued. He said that “the good actors are in real danger of being taxed right out of business.”

Supervisor Rex Bohn told Dillon that “every dairyman, timber man, truck driver, log truck driver in the whole county and the state will tell you, welcome to their world.”

Bohn said taxes and fees are part of the legalization scenario. “It’s the mantra that we said years ago — be careful what you ask for,” he continued.

Supervisor Ryan Sundberg said lower tax rates will pay off in the long run by attracting more involvement in permitting and taxing. “In five, 10 years from now, if we get anywhere close to the numbers that are out there, this county will not have any money issues,” he continued.

If approved for the ballot and passed by voters, a marijuana excise tax would go into effect on Jan. 1, 2017, although collection of taxes would happen later. Statewide recreational marijuana legalization will also be up for voter approval.

In addition to the other directives, supervisors asked staff to work inflation into the ballot measure’s rate calculations.

A draft ballot measure ordinance will be considered by supervisors on July 19, with a vote on adopting it scheduled for Aug. 9.

The Humboldt Independent

The Humboldt Independent is a family-owned newspaper covering politics, the environment, the marijuana industry, education, health care, crime, sports, arts and entertainment in Humboldt County, California. Established in 1997, the newspaper publishes a print edition every Tuesday, available at outlets throughout Humboldt County.